HomeEconomyAs interest rates rise, what will disrupt? Economy As interest rates rise, what will disrupt? By inew June 30, 2023 0 38 views Share FacebookTwitterPinterestWhatsApp SPGI +1.% Add to/remove from watchlist Join the watch list Add Job Location successfully added to: 15 type: purchase Sell date: quantity: price Point value: Leverage: 1:1 1: 1: 1: 1000 CL +0.% 50 ADD TO WATCHLIST / Remove from watchlist Add to watch list Add location Location successfully added to: Please tell us your holdings and investment portfolio type: purchase Sell date: quantity: price Point value: Leverage: 1:1 1: 1: 1: 1: 1 : 1: 1: 111: 11 Committee: 8119 2023 8119 Create a new position Portfolio Add Create4002023 + add another position to close LONDON (Reuters) – Markets are wary of which sectors sharp interest rate moves in Britain and Norway this month are reminders that austerity The policy is not over yet. The IMF warned that central banks may take longer to bring inflation down, and renewed financial turmoil could make that process even longer. Stability has returned since the bank turmoil in March, but elsewhere warning lights are flashing and tensions in Russia could also spark pressure. Here are some stress points. 1/ Real Estate: Part 1 While hoping to boost the U.S. housing market, European residential real estate has been hit by higher interest rates. UK interest rates have jumped from 0 to 5%. % Two years ago, 2.4 million homeowners would switch from cheap fixed-rate mortgages to higher rates by the end of the year -, the Banking Trade Body estimates the UK Department of Finance. Interest rates rose again in Sweden on Thursday, which is noteworthy, with most homeowners’ mortgages moving in tandem with rates. The eurozone property market appears to be “freezing” as transactions and prices fall, according to Richard Portes, professor of economics at London Business School. “You can expect worse 100 when will the full impact of the rate hike be felt,” he said. 2/ Real Estate: Part 2 The commercial real estate industry took advantage of the low interest rate era to borrow heavily and buy real estate assets, but the commercial real estate sector is facing higher debt refinancing costs as interest rates rise. “The most important thing is interest rates. But not only interest rates; what is also important is the predictability of interest rates,” said Thomas Mundy, head of capital markets strategy at real estate firm JLL in EMEA. “If we fix interest rates, real estate prices may adjust. But right now, the lag in real estate pricing adjustments is creating an uncertain environment.” In Sweden, high debt, rising interest rates and a flagging economy have created a toxic cocktail for Sweden. commercial estate. HSBC’s decision to leave London’s Canary Wharf for a smaller office in the City of London underscores a trend of downsizing offices that has rocked commercial real estate market. 3/ Bank assets As credit conditions tighten, banks remain is the focus. “There is no place to hide from these tightening financial conditions. Banks are feeling the pinch from every central bank,” said Florian Ielpo, head of macro at Lombard Odier Investment Managers. ” Banks hold two types of balance sheet assets: liquid and Assets that, like savings, are designed to earn extra value. Rising interest rates have driven the growth of many of these assets % – Ielpo said, % less than the purchase price. If the bank needs to sell them , there will be an unrealized loss. Most at risk are banks’ real estate holdings. Fed Chairman Jerome Powell says the Fed is “very carefully” Monitor the bank for potential vulnerabilities. Lending standards for average households are also an issue. Ielpo expects consumers to stop making loan payments in the third and fourth quarters. “This will be the Achilles’ heel of the banking industry,” he added. 4/ Default Rising interest rates cost businesses as their cost debt balloons. Standard & Poor’s expects European secondary investment in March The default rate of rated companies will rise to 3.6% 50 From 2.8% in March this year. Marcus Allenspach, Head of Fixed Income Research at Julius Baer Bank ( Markus Allenspach) pointed out that the number of global defaults in the first five months of this year was comparable to 100 Because during . French retailer Casino is in debt restructuring talks with its creditors. Sweden’s Steel Business Briefing has been fighting for survival since its shares plummeted in May on financial concerns. “We’re starting to see growing distress in the corporate space, especially at the lower end of the market where floating rate debt is the most,” S&P Global (NYSE: SPGI ) rating by Nick Kramer. 5/ Russia after the bet mutiny Wagner’s mutiny is so far against Russia The worst threat to Vladimir Putin’s rule may have been suspended, but the reverberation will be long. Any change in Russia’s status — or the momentum behind the Ukraine war — can be felt near and far. Has had a direct impact on commodity markets crude oil grain, Most sensitive to changes in Russia. If the situation escalates significantly, the knock-on effects, from inflationary pressures to risk aversion, could have far-reaching consequences for countries and businesses already feeling the pressure of rising interest rates. “Putin can no longer claim to be the guarantor of stability in Russia, in a stable and popular system you don’t have this kind of division and challenge.” Tina, geopolitical strategist and founder of Fordham Global Vision Tina Fordham said. 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